Battle Stations

By Carole Buia

There used to be two don'ts for corporate-meeting planners: don't take employees on a ship, and don't serve them fish. But that's just what the cruise-ship industry is trying to do. The industry built a fleet of leviathans in the '90s, which led to a glut and depressed prices last year. So now it has launched an aggressive campaign to grab a piece of the more than $20 billion corporate-meeting and incentive (or employee-reward) business.

In the past five years, all major cruise lines have striven to make themselves meet-worthy. Leading the pack is Royal Caribbean, which in 1995 introduced Legend of the Seas, its first meeting-intensive ship. Since then, 12 of its fleet of 13 ships have been outfitted for work as well as play. RC's Voyager of the Seas and Explorer of the Seas are 142,000-ton whales that feature a 425-seat conference room, an ice-skating rink that doubles as a trade-show arena, an Internet cafe and a theater with a capacity of 1,362. Other players like Celebrity, Norwegian and Carnival have also jumped on board. Disney's cruise ships not only have meeting spaces, but also a private port of call, Castaway Cay, which can be used for team-building and recreational programs.

Landry & Kling, a Miami-based company specializing in meetings at sea, says that while the bulk of its business continues to be incentive trips, the percentage of corporate meetings has more than doubled, from 6% to 16%, in four years. For instance, last year 156 employees from Kelly Services' Scientific Resources Group held their annual meeting on a four-day Bahamian cruise aboard Norwegian's Majesty. Meetings took place Saturday and Sunday from 8 a.m. till noon, leaving afternoons free. (And obviously, ducking meetings for the tennis court is a tad more difficult at sea.) Dinners were scheduled so employees from different locations could get together. "The impact it had on the staff was incredible. Many had never been on a cruise," says Rolf Kleiner, a senior vice president at Kelly. "It also came out cheaper than a land-based resort. But I wouldn't consider it for more than four days."

Cost can be a factor. Kinko's, which has chartered ships to reward employees, considered holding a meeting on board. But, according to a spokesperson, "after some research, we learned we'd spend a fortune on just e-mail and checking our voice mail." Ship-to-shore phone charges range from $7.50 to $9 a minute. As for e-mail, setting up an individual account on a Carnival ship costs $3.95; receiving e-mail is $3.95; and surfing the Web runs 75[cents] a minute. Other costs include port fees and tips.

With other corporations, the sticking point isn't phone charges but taxes. Most cruise ships are not registered under a U.S. flag, rendering the expenses nondeductible. But tax lawyers have found ways to circumnavigate the problem. For example, if a company with an overseas branch in a foreign port has a land-based meeting there, then a related cruise could be considered "luxury water transportation." Tax deductible.

Still, some corporations shy away from cruise meetings to avoid explaining them to their shareholders. Confesses a Connecticut-based meeting planner: "Even though the value is unbelievable, there still is a huge perception problem. Shareholders will say, 'How hard can they be working if they're on a cruise?'" About as hard as they're working when the meeting is at La Quinta. But that's another subject.